# Dopex Essentials: ATM, ITM, OTM

Dopex-Essentials
###### Hey, welcome again to another Dopex Essentials Episode. In this article, we are going to be focusing on three key terms that you need to know when trading options.
• In The Money(ITM)
• Out of The Money(OTM)
• At The Money(ATM)

# 📌In the Money

## Key Points

• An ITM call option means the option holder can buy the asset below its current market price
• An ITM put option means the option holder can sell the asset above its current market price
• An option that is ITM does not necessarily mean the trader is making a profit on the trade.
• A call option that is ITM at expiry has a chance to make a profit if the market price is above the strike price
• An investor holding an ITM put option has a chance to earn a profit if the market price is below the strike price

# Conclusion

• An option is ATM when the strike price and market price of the underlying asset are of the same value
• An option is OTM if the strike price is not favorable to the market price
• An OTM call option would have a higher strike price than the market price of the underlying asset. Whereas an OTM put option would have a lower strike price than the market price
• An OTM option means that the option has yet to make money because the underlying assets price hasn’t moved enough to make the option profitable. As a result, OTM options usually have lower premiums than ITM options
• The value of the premium paid for an option depends to a larger extent on how much an option is ITM, ATM, or OTM.
• Many factors can affect the premium of an option including volatility, and the time until the expiration. Higher volatility and a longer time until expiration mean a greater chance that the option could move ITM. As a result, the premium is usually higher.

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